Short sales and loan modifications in Reno: interview with Shayla Stitser

About: Shayla Stitser and I talk about the advantages and disadvantages of short sales and loan modifications in Reno.

Shayla Stitser is one of our ace loan officers.   Hardworking (she answered my phone call just before walking the aisle) and never a buck passer, beware of the gentle face, she's a fighter who does whatever it takes to get the loan through--always looking out for the best possible deal for her clients. 

At 29, she has won the title of top producer year after year and currently owns and operates a mortgage branch for Guild Mortgage in Reno, NV.

I saw Shayla at the office on her way to the court to attend a loan mediation meeting with a friend of hers.

In this interview we talk about her experience with short sales and loan modification.

1) Reno Home Blog: Hello Shayla, I'm curious, why were you going to court today?

Shayla Stitser: Unfortunately, the court case got postponed because the courthouse was evacuated on an emergency.  However, I was accompanying a friend who was contesting his decision from the Supreme Court mediation program.

I attended the mediation with them back in November and nothing was resolved at the mediation.  The homeowner's lender sent an attorney from Salt Lake at the last minute who knew absolutely nothing about the situation and who also had no authority to modify the homeowners loan.  Since that went no where, they filed the necessary paperwork to elevate it to the district court to try and get the court to modify the loan. 

I was going to the meeting because he had me analyze the his financial situation and eligibility for a modification based on the Making Home Affordable Modifcation Program. (HAMP) 

I was hired because the homeowner and attorney had me analyze the homeowner's financial situation and eligibility for a modification based on the government's Making Home Affordable Modifcation Program. (HAMP) 


2) RHB: you mentioned something about loan modification.  I was just reading a blog post from calculatedriskblog.com that stated that about "70% of loan modification are in trouble Why do you think loan modification hasn't been as successful as we'd like it to be? 

Shayla: Well there is a statistic that 65% of the loans that get modified are back in default within one year.  Therefore, the banks aren't overly excited about issuing the modification and the amount of staff and resources it takes to service the thousands of modification requests is overwhelming. 

Therefore, most homeowners wait months upon months to get an answer and usually that answer is "NO."  I have found that typically the homeowner either makes too little income or too much income to fit within the bank's modification guidelines or HAMPs guidelines.

3) RHB: from what you've seen and heard what are the most common scams/false promises perpetuated by some so called LOAD MODIFICATION experts? 

Shayla: I often hear that homeowners paid a company $3000 to get a modification and then never heard from them again.  Or the company spent several months working on it and were able to get a measely $100 reduction in the mortgage payment.

4) RHB: are all loan modification bad? What are the advantages of some loan modifications? Can the principal be lowered or just the monthly payments? 

Shayla: No, not all modifications are bad.  A modification however, is a short term solution to the problem.  Often times they are only available for a 5 year period before the loan re-sets back to it's original interest rate.  I have yet to see a company do a principal reduction, although I have heard a few have received one.  Almost all successful modifications are payment/interest rate reductions.

6) RHB: Let's move on to short sales, when do you suggest people take the course of short sales? 

Shayla: I am becoming a big fan of short sales over modifications because a person can turn around and buy a home with a new FHA loan as soon as one day after closing on the short sale. 

Of course, this is only an option if you maintainted (on time) payments to your lender, but I have seen several clients successfully do this.  Obviously, if you can successfully short sale and then buy another home that is much more affordable, that is an ideal situation.

7) RHB: In your opinion what are the pros and cons of doing a short sale?

 

Shayla: There are always pros and cons to every decision and really this is a good question for a CPA and attorney.  Unless expressly written and waived in your short sale approval letter from your current lender, a lender has several years to pursue a deficiency judgement against you for the amount of money that was lost on the short sale. 

 

Many lenders are waiving this right when they close on the short sale, but it is definitely something to be aware of.  Also, if you are "short saleing" an investment property or a home that you did "cash out" refinances on, there can be tax liabilities due on the amount of money that was written off  by the bank as well. Again, check with your professionals.  All I can say is thousands of people are completing short sales every day and getting a fresh start with their life.

• Reno Short Sales and Foreclosure page--click for more articles and interviews

• Confessions of a Reno short sale expert

• Confessions of a Sparks short sale expert

• Click here to get the FREE short sale guide